Disney is a slice closer to having full control of Disney Streaming Services (DSS), the back-end technology workhorse formerly known as BAMTech, after acquiring the NHL’s 10% stake in the business for $350 million.
Just the 15% stake held by BAMTech’s founding father Major League Baseball (MLB) now stands in the way of Disney and DSS domination – but is MLB willing to sell?
With Disney+ plotting an Asia Pacific expansion effort for November – launching in South Korea, Hong Kong and Taiwan – now might be a good time for MLB to cash in on its technology baby, which was born out of the MLB Advanced Media division.
With Disney paying $1 billion for its 33% stake in BAMTech in 2016, while the NHL has recouped $350 million for 10%, that values a one-third stake today at approximately $1.15 billion – hardly a huge return on investment over five years. For Disney, however, the technology value BAMTech has injected into its streaming operations is worth infinitely more than the financial value of what is now DSS. So, for MLB, unless it sees something on the horizon that will send DSS stocks skyrocketing, then we really see little reason for it to be hanging around. Another reason might be something in the small print of contractual agreements preventing MLB from relinquishing full control until a certain period.
Ever since Disney arrived on the scene with this initial minority landgrab in BAMTech, we knew it was an eventual precursor to a full takeover for which the House of Mouse would use to quickly develop its own OTT video technologies to drive its streaming properties.
Disney acknowledged in August 2017 that consumers were moving away from traditional pay TV to streaming services even faster than it had anticipated. Accordingly, Disney exercised its option to acquire an additional 42% stake in BAMTech for $1.58 billion. This took its holding up to 75% and valued BAMTech at $3.75 billion at the time, reflecting the premium that has to be paid for a proven specialist in live streaming infrastructure.
So, this means BAMTech is actually down some $750 million on its peak valuation in 2017. What will it take to sell up, MLB?
Of course, Disney’s 85% shareholding in DSS is more than enough for it to pull the strings, although Disney is the kind of company that doesn’t like to share, taking Hulu as the prime example with Disney almost in full control after inheriting Fox’s share before encouraging WarnerMedia to sell its minority stake back to Hulu. Comcast has agreed to sell its 33% share in Hulu to Disney, although that deal is not contracted to complete for another couple of years at least, for various complicated legal reasons.
As well as powering Disney’s own streaming endeavors, DSS at one point had pretty much wrapped up the market as the de facto sports streaming infrastructure provider, particularly in the US and even more so since the assets of NeuLion – one of few alternatives to BAMTech – were swallowed up inside Endeavor Streaming in 2018.
Interestingly though, in 2019, Endeavor Streaming then poached one of BAMTech’s longest-standing clients in the form of WWE. At the time, there was no obvious reason for the switch, with the contract expiring in 2018, and WWE opting not to renew. However, it later transpired that it was a direct result of BAMTech evolving into DSS, which meant shifting all focus to Disney’s three streaming properties Disney+, ESPN+, and Hulu – suggesting other customers might have since jumped ship to have more control over their own infrastructure.
AWS looks to have been a key beneficiary from this, hoovering up defectors including the NHL earlier this year, which was more than likely a tipping point for NHL to sell its stake in DSS.
Attempts have since been made to create competitive alternatives to BAMTech, before it became DSS. In early 2017, US broadcasters NBC Sports Group and Turner teamed up to provide sports leagues and networks with OTT and VoD services, which involved NBC’s Playmaker Media tying the knot with Turner’s iStreamPlanet. As far as we can tell, this venture has not given DSS sleepless nights.
BAMTech had dabbled outside of sports too, with WarnerMedia’s HBO Max initially being developed on the same back-end platform as Disney+, hosted on AWS cloud infrastructure, although we have our suspicions that things have been juggled around and moved in-house since then.